Savills data shows that in the apartment segment, new supply fell 86% year-on-year to 1,980 units; of which Q2 supply accounted for only 19%. There was no new Grade A supply, while Grade C accounted for 77% of the market. Primary supply of 6,700 units fell 59% year-on-year; Grade C accounted for 45%, Grade B for 35% and Grade A for 20%.
Average selling price was VND125 million/m2, up 44% year-on-year due to high-priced Grade A and B inventory.
Ms. Giang Huynh, Deputy Director, Research & S22M Department, Savills HCMC commented that the current apartment price difference is about 30 times compared to the average income of city residents.
“ The average income of a household in Ho Chi Minh City is only about 15 million VND/month. Meanwhile, the average price of an apartment in a new project is currently 5.5-6 billion VND ,” said the Savills expert.
Ho Chi Minh City residents with an income of 15 million VND/month have to spend several decades to buy a house.
Ms. Giang Huynh analyzed that with that income level, if people are able to save 40-50%/month, it will take several decades to be able to buy a house, in case they do not use credit or do not have any support from relatives.
“ It will be very difficult for a household based on pure income, average income to buy a house in Ho Chi Minh City at this time. You must have a fairly high income, as well as financial leverage support to be able to buy an average apartment ,” said Ms. Giang.
According to Savills research, apartment sales in the first half of the year reached 1,170 units, down 90% year-on-year; in the second quarter, there were more than 300 transactions. The absorption rate in the first 6 months of the year reached 17%, down 56 percentage points year-on-year. Of which, class C attracted more buyers and accounted for 62% of sales. The product line of apartments under 5 billion VND met the needs of many buyers.
In the villa/townhouse segment, no new projects were recorded in the first half of 2023 due to difficulties in raising capital, scarce vacant land and complicated legal procedures.
However, the absorption rate in 1H23 hit a 10-year low of 15%, down 57 percentage points year-on-year. The transaction volume in 1H23 reached only 158 units, down 74% year-on-year.
“ Buyer caution continues to weigh on market liquidity. However, the outlook will improve thanks to specific mechanisms on real estate, monetary policy and infrastructure investment, ” Mr. Troy Griffiths predicted.
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